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Hi,I am trying to figure out why using the transformation x= Ln(S) is computationally more efficient when using finite difference methods . Can anyone share with me why we use this transformation ? One reason that I can think of is that after the transformation, the differential equation will have a constant drift and variance and will cut down the computation time for the finite difference method. Anyone can help ? Thank you.

another will be that there are fewer multiplications:instead of terms likeS dV/dS you get terms like dV/dx

better to spend less time figuring and more time doing - if you're interested in computational efficiency, code it up both ways and compare speed and accuracy